We discussed uncompensated care a few days ago, where I mentioned the variation in health care costs across the US. But, is that variability related to the cost of living in the various regions of the US? Or, is it attributable to the relative health of folks in various regions?
A new study really takes those assumptions to task. For years, most of us have relied on the Dartmouth Institute for Health Policy and Clinical Practice. Their studies led us to believe that cost variations were because we (as national and insurance company policies) employed bad incentives (such as our fee-for-service structure), which lends itself to waste- overtreatment and manifold diagnostic tests.
Now, Drs. James D. Reschovsky, Jack Hadley, and Patrick S. Romano have provided us a different point of view in their new study, “Geographic Variation in Fee-for-Service Medicare Beneficiaries’ Medical Costs Is Largely Explained by Disease Burden” (published in the journal Medical Care Research and Review). They cite their research that determined the vast majority of regional variation (75 percent to 85 percent) can be explained by the subjects’ health differences between regions. But, the Dartmouth group (via Dr. Jonathan Skinner) counters that their research does not fully consider the aggressive position of various physicians in demanding diagnostic procedures.
I won’t wade into that discussion right now. But, I did find that the data provided by Reschovsky et. al. finally afforded the rest of us some real information about how much more care we provide for those nearing the end of their lives. And, those results are astounding.
Reschovsky et. al. examined the health care costs for 60 metropolitan regions in their study. For all health care provided, the raw data indicated that North East Indiana had the lowest costs, at $5632. Boston, New York and Miami topped the charts with costs ranging from $ 12K to $15K. (When adjusted for the case-mix of the patients, NE Indiana jumped to 10, with Rochester providing care at the lowest cost; Tulsa, Shreveport, and Miami (still) were the most expensive.)
But, for those patients who died during their therapy, the costs were outrageously more expensive. Now, instead our spending $ 5.6 to $15K, those costs range from $ 27 to $ 63K- a four or five fold increase. (Yes, Miami was still the most expensive.) And, if the data were arranged to reflect the case-mix for each region, the costs were $ 32 to $ 51K.
Now, we need to determine what percentage of folks are “saved” by such expensive therapies. If only a small percentage of these people are alive within six months of such treatment, perhaps we should re-evaluate our choices.
Although I said I would not wade into the Dartmouth- Reschovsky controvery, the fact that Miami was always the highest cost plays well into Dartmouth’s position.
